AbstractThis paper attempts to determine the capital structure of listed firms in the sugar and allied industry of Pakistan. The study finds that a specific industry’s capital structure exhibits unique attributes, which are usually not apparent in the combined analysis of many sectors as done by Shah & Hijazi (2005). The study took 33 firms in the sugar sector, listed at the Karachi Stock Exchange for the period 1999-2004 and analyzed the data by using pooled regression in a panel data analysis. Following the model developed by Rajan & Zingle (1995) it has chosen four independent variables i.e. firm size (measured by natural log of sales), tangibility of assets, profitability and growth and further analyzed the effects on leverage. The results, except for firm size and growth were found highly significant.